Why Lebanon's economic woes aren't hurting investor interest as much as you may think
Five years ago, right before the onset of the Arab Spring, Lebanon’s growth rate was over 9 percent, giving many analysts confidence of even better days to come. With a projected growth rate of less than 1 percent this year, the country’s business leaders are seeking creative solutions to get the market back on track – even continuing to look at real estate and the stalled hospitality and tourism industry, once the cornerstone of the economy, after the banking sector.
“We would have been happy as a civilized country to set a vision for tourism under normal circumstances based on an economic analysis,” Tourism Minister Michel Pharaon said at the third annual Lebanese Economic Forum. “While we are waiting for oil industry, let us say that the tourism sector is still Lebanon’s natural resource, and it needs attention to grow again – regardless of the security and political situation.”
Other speakers at the conference also repeated their concerns about the slow economic growth last year.
“The year 2013 was one of the most difficult years – socially, politically and economically – that Lebanon has gone through. There was less than 1 percent growth – less than 0.2 percent came from the private sector,” Fouad Zmokhol, president of the Lebanese Businessmen Association and general manager of the holding group Zimco, told The Daily Star.
Despite the bleak outlook for the foreseeable future, Zmokhol sees 2014 as an “important year” for the state’s institutions, which could possibly lead to better stability and thus a stronger economy – with the recent formation of the new government, and the scheduled elections for president in May and Parliament in September.
He also pointed to last year’s easing of U.S. sanctions on Iran, which has allowed for more foreign investment in the region. He says that now the main political deal he is looking forward to for the region would be an agreement between Russia and the United States on Syria, which has by far seen the most violence of any country in the region since uprisings began sweeping the Middle East in 2010.
And once the unrest in Syria does subside, he sees opportunities for business in post-war development.
“In Syria, a huge reconstruction will happen – around $200 billion. We’re waiting for an agreement between Russia and America.”
Looking forward, Zmokhol also sees potential in Lebanon’s hospitality sector, which has been hit hard in the past couple of years by persistent bombings, kidnappings and cross-border fire from Syria. He also noted that some of Lebanon’s biggest companies were founded during the Civil War, pointing to the rewards of taking risks during difficult times.
Speaking during an afternoon panel at the conference, Nasser Al Nowais, chairman of Rotana Hotel Management Corporation in the United Arab Emirates, said that although business had suffered greatly, he had never taken his eyes off Lebanon. Still considering it the center of tourism in the Arab world, he is planning large-scale construction projects in the country.
Meanwhile, Fady Gemayel, chairman and general manager of Gemayel Freres Co., which produces paper products, urged people not to forget the country’s industrial sector, which has continued to produce through hard times – including two bombings of his factories during the civil war.
“Industry has a continued role in a sustainable economy,” Gemayel said. “We [industrialists] are flexible people, and we have a commitment to the long term.” He suggested that once stability returns to the region, manufacturing could play an important role in the development of Lebanon’s leading sectors.
By Brooke Anderson
- Appreciating three-star hotels: Dubai steps in to address its unhealthy obsession with luxury hotels
- The sobering reality: Gulf parliaments declare war on alcohol
- Putting their eggs in tourists' baskets: why Dubai's real estate developers are shifting to hospitality
- The 'haunted' sector? Half of Lebanon's hotels have partially closed down
- Getting even Saudis to stay: can the Kingdom brand itself as a premier tourist destination?